Redefining AML compliance in banking through robotics

The ‘workplace of the future’ has reached its inflection point with the proliferation and promise of new age technologies. For the banking and financial services sector, early technology adoption has been beneficial and many organizations are already taking calculated steps to fuel digital transformation through the Internet of Things, cloud, deep analytics, robotics, cognitive tools and artificial intelligence. Core focus areas continue to be compliance and financial crime management however, other elements such as enhancing operational efficiencies, increasing customer satisfaction, minimizing costs and reducing turnaround time while maintaining accuracy and quality are also high on the agenda.

On the road of automation

Many banks and financial institutions have already begun their journey to deploy latest technologies across banking operations. The role of Robotics Process Automation (RPA) is significant here.

Conceptually, RPA is a software application that can imitate the actions of a human while interacting with the different applications in a desktop computer or laptop, 24×7, 365 days of the year. It can run with or even without human interaction, and is typically for tasks that are repetitive in nature. At a very rudimentary level, the banking sector can use automation in functional areas such as human resources, finance and customer servicing. For example, most core banking systems handling customer data rest on a mainframe legacy system, which accesses data through ‘dumb’ terminal emulators. The use of RPA or bots using surface automation technique can make the process of retrieving data faster, with a lower rate of error. RPA will help banks to remain competitive, offer superior customer experience to retail and corporate customers, as well as augment the bottom-line.

Using RPA for Anti-Money Laundering (AML) compliance

The banking and financial services sector is highly regulated sector and the impact of any ‘error’ can be catastrophic. The retail and corporate customer base will continue to augment with time. Meanwhile, cross border or foreign regulators have rolled out multiple laws and guidelines, failing which there could be penalties in cases of non-compliance. As a result, ‘Know Your Customer’ or KYC norms are turning stricter with more cases around defaults, money laundering, sanctions and misappropriation coming to the forefront. The role of RPA can be game changing with application in areas to enhance regulatory compliance, including AML and customer due diligence. Some of the areas where RPA can be used include:

Customer onboarding – The process and time taken during customer onboarding can be potentially reduced from months to weeks, even days. RPA can help in identification and verification of a corporate customer by logging in to various public registers of companies and retrieving the registration information (date, number) and getting the list of company directors. RPA bots also have the capability to identify beneficial owners from trusted sources and can perform background checks to determine the corporation’s owners and directors for the bank’s customer screening applications.

Customer due diligence – Due diligence processes can be improved substantially, with time reducing for an average check by as much as 50%. RPA can be used to enter customer information in the system and existing information can be validated with the bot accessing internal and databases, and data extracted from documents, social media and websites.

Customer outreach – From an AML perspective, banks are required to collect information from customer during initial onboarding. This has to be updated at regular intervals depending on the customer’s risks level, which makes the process time consuming and prone to errors. Using RPA, the process can be structured and additional data can be collected from external data sources periodically.

The banking and financial services sector is battling a number of challenges but the use of robotics can alleviate some of them. Optimum and intelligent use of technologies such as RPA can be a much needed breather for risk and compliance officers as it can free up important hours which can be used to monitor critical areas. Increasing requirements for AML compliance are also pushing banks to explore effective methods to deal with high volume and manual processes. The maturity and ability of an organization in adopting technologies including RPA and maximizing its full potential can ultimately become a defining factor in their path to success.